updated 7/19/2011 12:01:42 PM ET 2011-07-19T16:01:42

Guests: Ezra Klein, Senator Sheldon Whitehouse, Joan Walsh, E.J. Dionne, Glenn
Greenwald, Brad Woodhouse, Laura Flanders, Bill Press

ED SCHULTZ, HOST: Good evening, Americans. And welcome THE ED SHOW tonight from New York.
Sam Stein of “The Huffington Post” is reporting that the Senate may vote on McConnell‘s compromise plan as early as this week. That would mean Republicans get big spending cuts in exchange for zero tax increases. The president vowed that—well, that wouldn‘t happen. Tonight, let‘s be an honest broker and make sure he keeps his word.
This is THE ED SHOW. Let‘s get to work.
(BEGIN VIDEOTAPE)
(MUSIC)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I do not see a path to a deal if they don‘t budge, period.
SCHULTZ (voice-over): President Obama drew a line on taxes last week. Republicans are running out the clock, and it looks like the president is caving.
Senator Sheldon Whitehouse is here.
One of the key figures in the News Corp phone hacking scandal is found dead, and there‘s more trouble in the United States for Rupert Murdoch. Filmmaker Robert Greenwald on the latest.
And in “Psycho Talk” tonight.
HERMAN CAIN ®, PRESIDENTIAL CANDIDATE: Yes, they have the right to do that. That‘s not discriminating based upon religion against their particular religion.
SCHULTZ: Republican presidential hopeful Herman Cain has a warped understanding of the Constitution. More anti-Islam remarks from the Godfather‘s Pizza man. And tonight, he‘s attacking another candidate on his religion.
(END VIDEOTAPE)
SCHULTZ: Remember last week everybody was saying, well, the president is in such a good place right now. Really?
Folks, as liberals we need to prepare ourselves, I think, for the big cave. It could be on the way. The president said that he wouldn‘t agree. He would not agree to cut to the big three unless Republicans were going to put revenues on the table. He was asked about it last week.
(BEGIN VIDEO CLIP)
REPORTER: Did you see any path to a deal if they don‘t budge on taxes?
OBAMA: I do not see a path to a deal if they don‘t budge, period. I mean, if the basic proposition is “it‘s my way or the highway,” then we‘re probably not going to get something done because we‘ve got divided government. We‘ve got Democrats controlling the Senate. We probably are going to need Democratic votes in the House for any package that could possibly pass. And so, if, in fact, Mitch McConnell and John Boehner are sincere—and I believe they are—that they don‘t want to see the U.S. government default, then they‘re going to have to compromise just like Democrats are going to have to compromise, just like I have shown myself willing to compromise.
(END VIDEO CLIP)
SCHULTZ: You know, folks, you got to go back to the early part of that sound bite. The word “probably” is awfully vague. We probably won‘t get a deal done.
That leaves the president a big gap. Basers out there, prepare yourselves. The president, OK, he‘s compromised to the tune of $4 trillion. But McConnell and Boehner, they‘re never going to raise taxes.
Senate Majority Whip Jon Kyl clearly drew the line in the sand on Sunday.
(BEGIN VIDEO CLIP)
SEN. JON KYL ®, ARIZONA: Unless the president gets off his absolute obsession with raising taxes, Republicans are not going to agree to do anything that will harm our economy. And job-killing taxes harm our economy. So, there will not be a default. But as to whether or not we can achieve savings in the process, again, depends on the president.
(END VIDEO CLIP)
SCHULTZ: I did not hear the world “probably.” I heard the word not.
Republicans would rather see the markets crash, unemployment go through the roof and Americans in bread lines before they raise one damn dime in taxes. When it comes to the debt crisis, Republicans are only interested in playing Russian roulette with the stupid catchphrases.
(BEGIN VIDEO CLIPS)
REP. JIM JORDAN ®, OHIO: Let‘s let the American people decide, do they want something common sense as cutting spending, capping the growth in government and requiring a balanced budget amendment to the Constitution. Do they want that common sense versus the president‘s plan? Let‘s have a national debate.
SEN. JIM DEMINT ®, SOUTH CAROLIAN: To cut, cap and balance plan in the House.
KYL: Cut the deficit, put a straitjacket on it, and balance the budget—the so-called the cut, cap and balance.
UNIDENTIFIED MALE: I want to make sure we cut spending here in Washington. I want to make sure that we have a cap on the amount of spending we do, and I want to have a balanced budget amendment.
(END VIDEO CLIPS)
SCHULTZ: Did they just talk better? Republicans want to cut middle class to the bone and cap any chance for working people to attain the American Dream.
The “balance” part of their plan is the real devil on the details. Republicans want to change the Constitution so they can dodge any blame on balancing the budget.
This bill is a dream come true for Tea Party kingmaker Jim DeMint.
(BEGIN VIDEO CLIP)
DEMINT: To have any kind of permanent reform, we send to the states a constitutional amendment that would force Congress to balance the budget. Let‘s let the states and the American people decide.
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SCHULTZ: Yes, let‘s let the American people decide, right?
DeMint and the Tea Party, see, they love the Constitution. But they always want to change it. And in order to change the Constitution, Republicans need to have two-third majority in the Senate. Senator Tom Coburn thinks that he has the American people on his side?
(BEGIN VIDEO CLIP)
SEN. TOM COBURN ®, OKLAHOMA. Why in the world aren‘t there votes for the balanced budget in the U.S. Senate? That‘s the question Americans ought to ask -- 67 votes to live within our means when borrowing 40 cents of every dollar that we‘re spending today. I think the American people would like to see us do that.
(END VIDEO CLIP)
SCHULTZ: Damn, they‘re good at telling us how we think, aren‘t they?
Coburn is totally wrong. According to a new FOX News poll, the American people they love the quote overwhelmingly reject a balanced budget amendment with cuts to the big three—Medicare, Medicaid and Social Security. And according to a brand new CBS News poll, 71 percent of the American people reject the Republicans handling of debt negotiations.
Today, the president threatened to veto cut, cap and balance if it reaches his desk.
Speaker Boehner, of course, quickly fired off this written statement. “This unfortunate veto threat should make it clear that the issue is not congressional inaction, but rather the president‘s unwillingness to cut spending and return the future growth of our government.”
Now, the president needs to veto every Republican bill that reaches his desk if it does not include a tax increase. That‘s if we want to save the big three—of course, now including the McConnell plan.
So, where are we? Back to zero I think. Mitch McConnell and Harry Reid—they have been behind closed doors just devising this, I guess you could call it an escape hatch to get a deal done before August 2nd.
Now, according to “The Washington Post,” the plan would put the burden on president Obama and the Democrats to raise the debt ceiling three more times before the 2012 election, and, of course, give the Republicans $1.5 trillion in cuts. There would be no tax increase in the deal.
So, let‘s go back to the question President Obama was asked last week.
(BEGIN VIDEO CLIP)
REPORTER: Do you see any path to a deal if they don‘t budge on taxes?
OBAMA: I do not see a path to a deal if they don‘t budge, period.
(END VIDEO CLIP)
SCHULTZ: If they don‘t budge.
The majority of Americans want the rich to chip in more tax dollars. The stakes are awful high right now, but as I see it, there really is no better time for the president to stand strong. Why? Because he has the people on his side—although I‘m afraid the president will cave. I think the cave is coming.
He did it on the public option. I‘m not trying to open up an old wound. He did it on the extension of the Bush tax cuts because he wanted to save the middle class and help out the job creators.
Well, where are we now? How long is this go to go on? Don‘t we need liberal leadership in this country to stand up for the butcher, the baker and the candlestick maker? We‘re going to take it out of them again?
We‘re going to end up with a deal, folks, that‘s going after Social Security, that‘s going to go after Medicare and Medicaid, and there won‘t be any tax increases. And it wouldn‘t surprise me if we have to vote on the debt ceiling three more times before the election because I think the president at this point, whereas he is probably talking tough, I think he‘s willing to go out on the campaign trail right now and say, “All right, you saw how bad those guys were, is that how you want the country run?”
In the meantime, they‘ve already switched the subject talking about the balanced budget amendment? Nobody was talking about that last week.
So, I think the momentum has somewhat shifted in all of this. My advice to the president tonight is come out and talk to the American people in the pressroom from the White House every single day. Not once a week, not twice a week—maybe twice on Sunday. Just drill it in the minds of the American people over and over again that we can‘t do this unless we have a tax increase, because apparently the poll numbers right now aren‘t affecting the White House.
These negotiations are going on. Really? Harry and McConnell, Harry Reid and Mitch McConnell are behind closed doors coming up with a deal that talks about $1.35 trillion in cuts which the president said is too small and there‘s no revenue increases and we‘re going to have to vote on this three times before the next election?
Tell me—where‘s the Democratic victory? Where‘s the victory for the working folk of American? We‘re going to end up serving it up again.
Well, I misspoke. I‘m not in the middle class anymore. I just try to speak for ‘em.
Get your cell phones out. I want to know what you think.
Tonight‘s question: do you think President Obama should cave on tax increases, maybe take that off the table. Text A for yes and text B for no to 622639. And you can go to the blog at Ed.MSNBC.com. We‘ll bring you the results later on in the show.
There are some in Congress that stand strong for the middle class.
Tonight, joining us is Senator Sheldon Whitehouse of Rhode Island.
Senator, good to have you with us tonight.
SEN. SHELDON WHITEHOUSE (D), RHODE ISLAND: Good to be with you, Ed.
SCHULTZ: Your thoughts where we are right now as we seem to be turning the hourglass when it comes to momentum. Your thoughts, Senator.
WHITEHOUSE: Well, I think that the momentum is with the president. I think that he‘s got a chance to capitalize on that momentum to be a little bit less about the process and about who should eat their peas and a little bit more about the fact that the Republican Party and its current guise in Washington has decided that it‘s willing to endanger the country. It‘s willing to endanger our economy, it‘s willing to put our economic recovery and jobs at risk—all to protect special loopholes for special interests.
And I think that‘s a winning case. I think the public will be behind him. And as long as we‘re prepared to stand strong and protect Social Security and Medicare with the president making the case for us, I think this could be a strong moment to get through this deadlock, and get the American people a little bit out there, you know, on their phones calling in and beginning to call the Republicans on their intransigence and their unwillingness to compromise about one single loophole. Name one tax loophole.
SCHULTZ: But, you know, Senator, no matter how many phone calls are made and no matter how many polls are taken, it seems like the Republicans simply are not—are not—in any way, shape or form going to agree to any kind of revenue increase. Do you see it that way? Do you actually think they will say, OK, we‘ll pay more? What do you think?
WHITEHOUSE: I think at some point they‘re going to have to. The business community, the banks, the insurance companies, the folks who do a lot of the funding of their efforts, they really can‘t afford the kind of economic damage that crashing through the debt limit would cause.
SCHULTZ: OK. Now, Sam Stein of “The Huffington Post” is reporting tonight that the Democratic Senate leadership is preparing to introduce a compromise on the debt ceiling to the floor as early as before the end of this week, which, of course, is big—Friday is the big date, the 22nd. Senator, can you tell us tonight—will you vote for cuts to the big three without revenue increases?
WHITEHOUSE: I‘m completely opposed to cuts to Social Security and to Medicare benefits. They‘re completely unnecessary.
Anybody who feels the way I do can go to no SocialSecuritycuts.com and register or vote, join up. Let your voice be heard. I think we need to stand strong.
SCHULTZ: But—so you can sit here tonight that you will not vote for cuts in the big three unless it has revenue increases, correct?
WHITEHOUSE: I think that we need to take this right to the brink, and I‘m not going to make any hard pledges. I think part of the problem here in Washington has been that the Republicans have had so many hard pledges that they‘ve painted themselves into a corner. I think the American people are onto them.
And I think it‘s very important that the president come in and begin to take sides, because there‘s a real difference here between what we‘re fighting for, which is the Democratic budget is even between revenues and spending cuts -- $2 trillion in spending cuts we‘ve offered, and the Republicans won‘t budge. There‘s not a single tax loophole, not a single earmark in the tax code that they‘re willing to deal on. And I think we‘ve got to come together and put the pressure on.
SCHULTZ: Senator, good to have you with us tonight. Sheldon Whitehouse with us here on THE ED SHOW.
WHITEHOUSE: Thank you, Ed.
SCHULTZ: You bet.
For more let‘s turn to Joan Walsh, editor at large Salon.com and “Washington Post” columnist E.J. Dionne. He‘s also a senior fellow at the Brookings Institution.
Great to have both you with us tonight.
E.J., the Office of Management and Budget has come out and weighed in against cut, cap and trade saying that “neither setting arbitrary spending levels nor amending the Constitution is necessary to restore fiscal responsibility.”
Your thoughts on this. You‘ve written extensively about it. What do you think?
E.J. DIONNE, WASHINGTON POST: Well, I think the so-called balanced budget amendment, because it‘s not even that, is one of the most dishonest pieces of legislation to come along. And I know that saying something here in Washington—it‘s a way of cutting your big three and a lot of other programs without actually doing it. If you‘ll forgive the Harry Potter metaphor it throws a cloak over the cuts. But at 18 -- it wants to limit federal spending to 18 percent of GDP. First of all, since when is GDP a constitutional principle?
SCHULTZ: Yes.
DIONNE: And, in fact, it would probably be less than that, if it were calculated on the previous year, because you don‘t know what GDP is going to be the next year, that would be 16 percent. That would require incredible cuts.
Meanwhile, it will virtually lock in the low taxes on the wealthy that were passed under President Bush.
SCHULTZ: So, it‘s a scheme. There‘s no doubt it‘s a scheme. All of a sudden, this budget balance amendment, the talk by the Republicans, I think is a hoodwink and a diversion.
Joan, will the president do a deal without revenue increases? Will he have to go back to what he would really like not to do?
JOAN WALSH, SALON.COM: I hope not. I really hope not, Ed. I see the things lining up that you see, but I also see—I heard more firmness in that promise last week maybe than you did.
And I‘m also seeing, you know, we‘re in a situation now that you know very well where this new crop of Republican true believers, Tea Partiers and this freshman class, they have done an amazing thing. You have to hand it to them. They have pulled the discourse so far to the right so immediately as a minority. It is stunning.
So, now, we‘re sitting here, and we‘ve now got a whole new occasion in Washington. The debt ceiling is a time you can hold people hostage. We‘ve got a balanced budget amendment on the table.
And if Democrats just keep going over to the left—excuse me, to the right, to the right, to the right, the country is going to be ruined. I‘m happy to hear Senator Whitehouse talk about standing up, and I think it has to come from house Democrats. I don‘t think it can all be about President Obama.
SCHULTZ: But Senator Whitehouse also said he would not commit to vote a certain ways. So, the absolutes are not being found on the Democratic side.
And so, that brings me to what kind of cuts are we really talking about? E.J., $1.5 trillion. If that‘s the number, will the president go along with that? And if he does, does he look weak?
DIONNE: Well, I think all along, the sort of underlying assumption of these conversations was that if there were no revenue increases, tax increases, there wouldn‘t be any serious cuts to the health programs meaning Medicare or Medicaid.
Now, can you get to a number like $1.5 trillion without any cuts in those programs? Well, I‘d like to see what the actual numbers are. I don‘t think there‘s going to be any Social Security in this plan.
I think if the administration agrees to anything like this, they‘re going to do it in part because they want control over when these cuts happen.
SCHULTZ: Yes.
DIONNE: And I think their objective is to push them out forward so you don‘t have terrible cuts while we‘re still in the middle of this terrible unemployment in the country. I think that‘s part of the negotiations.
SCHULTZ: We‘re in a jobs crisis. No question about it.
And so, if we‘re in a job crisis and he offers up trillions of dollars in cuts to people on fixed incomes—Joan Walsh, how does the president survive that climate?
WALSH: I don‘t know. You know, we‘ve got a demand—a jobs crisis and a demand crisis, and when you cut government spending, you‘re going to wind up cutting demands. So, it feels like it makes the president‘s—it digs the hole deeper for him. It doesn‘t seem like a solution.
But if he is—if his primary goal and his primary value is appearing like the most reasonable man at the table, the only grown-up, all those cliches we‘ve been hearing, then he sees a deal as a win because it sets him up as the person that did the deal, who compromised.
SCHULTZ: Well, Joan Walsh, E.J. Dionne, I‘d like you to agree with me tonight—you don‘t have a deal until you have a deal in that town. We can talk momentum and we can talk who‘s got the upper hand and what the hot sound bite is—I mean, it takes money to buy whiskey where I come from, and I‘m telling you it‘s hard to get a deal with the Republicans because I don‘t think they‘re going to serve up a dime.
Great to have you both with us tonight. Thanks so much.
WALSH: Thanks, Ed.
DIONNE: Good to be with you.
SCHULTZ: Remember to answer tonight‘s question there at the bottom of the screen. I want to know what you think.
Coming up: just what is the Tea Party hopes to get out of these debt ceiling talks?
And Rupert Murdoch‘s future hinges on his testimony to parliament tomorrow. We‘ll tell you how and why the phone hacking scandal is nothing new for a company that uses Al Capone as a role model for its sales people.
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REPORTER: When word got out the doors open an hour and a half early, that‘s when people began racing for the opportunity to fill out an application for housing assistance.
(END VIDEO CLIP)
SCHULTZ: Was that America? You bet it was. That‘s political maneuvering and Republican theatrics at a new low last week in Washington, D.C., that was the scene in Dallas, Texas.
It‘s a reminder of just how bad things have gotten for the working poor in this country. Thousands risked being trampled to death for a chance at federal housing assistance? Well, for a chance to get on the waiting list for federal housing assistance.
With only 100 vouchers available, this young woman hopes she‘s one of the lucky few.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: You know, I‘m a student working three jobs, so I would definitely need help with my rent.
(END VIDEO CLIP)
SCHULTZ: Well, if the Republicans get their way and Obama caves on these debt ceiling talks, this kind of human stampede, we have to ask, is this common place? While the rich get off scot-free?
Up next: reaction from the Tea Party and the latest deal talks and Ezra Klein of “The Washington Post” says McConnell and his pals have just about won the war.
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SCHULTZ: Welcome back to THE ED SHOW.
We‘re still waiting a debt ceiling deal as the House prepares for a vote tomorrow and the Republicans cut, cap and balance plan. Now, the country has lost out on hundreds of billions in revenue since the Great Recession in 2007.
But what other factors led our debt to increase to $9 trillion over the past 10 years are pretty basic. Well, Bush led us into war, and look what happened. That, of course, is just the start of it all.
He expended Medicare without paying for it. He also helped to broker the bank bailout to help jump start the economy. After that mess, President Obama signed an $800 billion stimulus.
The biggest culprit, hands down, the Bush tax cuts costing this country $1.6 trillion. And we were told by Bush and the Republican Party that these cuts were essential to creating jobs. But during Bush‘s eight years in office, a grand total of 3 million jobs were created. That‘s 20 million less than his predecessor.
To continue our debt ceiling conversation, let‘s bring in MSNBC contributor and columnist to “The Washington Post,” Ezra Klein. You can catch him tomorrow filling in for Martin Bashir at 3:00 p.m. right here on MSNBC. And founder of the Tea Party Nation, Judson Phillips.
Great to have both of you with us tonight.
Ezra, first to you. You write that the Republicans are positioned to get the best deal out of this. I‘m starting to feel that way. That‘s why I led the show talking about it tonight.
Your thoughts on it. Why are they positioned well?
EZRA KLEIN, MSNBC CONTRIBUTOR: They‘ve got the timing and substance down. They wanted two things in the last couple of weeks. They didn‘t know it initially but they figured it out quickly. They needed a series of small deals, because a big deal has taxes in it. They don‘t want taxes. And a series of small deals keeps Obama from getting everybody in the room, keeps any political been at this time to strike a grand bargain and keep them from being able to tack on stimulus or any additives on the deal and keeps him from achieving goals.
It‘s an odd thing because the last election was all about the deficit, but, in fact, they‘re in worse shape that they‘ve got that $4 trillion deal to reduce the deficit than a series of small $1.5 trillion deals over the next year or two.
SCHULTZ: Mr. Phillips, will the Tea Partiers hold the line and not vote for a debt ceiling increase no matter what the package is? Let‘s say you got big spending cuts. Let‘s say you don‘t have any revenue increases. Would you still—do you think the Tea Partiers in the House would vote to raise the debt ceiling or hold the line?
JUDSON PHILLIPS, TEA PARTY NATION: I think they‘re going to hold the line. You know, we‘ve got hundreds of billions of dollars in just simple waste and fraud in the government that nobody is even addressing. We‘ve got spending that‘s out of control. You know, we have a debt crisis because we had a spending crisis. The politicians up in Washington went on a spending spree that would put the “Desperate Housewives of Beverly Hills” to shame.
SCHULTZ: OK. So, you‘re telling us tonight that the debt ceiling just isn‘t going to get raised? There isn‘t package that could be put in the House of Representatives that the Tea Partiers would agree to unless it was holding the line on the debt ceiling and we default on our bills?
PHILLIPS: Well, first of all, default is not automatic. It‘s running up the limit on your credit cards. Just because you hit the limit doesn‘t mean you default.
SCHULTZ: So, it wouldn‘t affect the credit? I mean, that‘s all what all the experts are saying now, that this is going to hurt the credit of the United States big-time, and it‘s going to hurt interest rates, unemployment will rise? You don‘t believe any of that?
PHILLIPS: No, if we keep paying it, service on the debt right now is only about 6 percent. So, we can still service the budget even with the budget cuts.
SCHULTZ: OK. Now, I‘m going to take you for face value. Let‘s say you‘re exactly right, Mr. Phillips.
Ezra Klein, how does that play out?
KLEIN: But it‘s not right. We can‘t go through it that way because if you do it like he‘s talking about, which is called prioritization, he‘s completely right that we could pay off the interest on the debt. It‘s about 10 percent of GDP. But we will lose $134 billion in federal spending that month. That is a body blow of 10 percent of August GDP. That is a new recession.
SCHULTZ: Very well put, but how they vote is how they vote. He‘s saying tonight that there‘s no way the Tea Party will go along with raising the debt ceiling. So, where does that leave us? I mean, they‘re not going to—even if they get the no raising in revenues and spending cuts in a big package, the Tea Partiers are sitting there and saying, I‘m not going to do it.
KLEIN: The Tea Party and the Republican Party are different.
Everybody expects Boehner is going to lose 50 to 80 people on this vote. He‘s going to have to get a bunch of Democrats in there with him, and when you hear the Democrats talk, a couple of shows today, you would hear come on and say, is this a good deal for you? I can comment on a show this morning, he said, no, it‘s a terrible deal. There‘s nothing we like about it, but we need to do it.
You‘re going to have a lot of Democrats holding their nose walking over to the other side not trying to use the leverage that Boehner can pass this in order to avert crisis. That is how you get it through if the Tea Party doesn‘t step up.
SCHULTZ: And, Mr. Phillips, the Tea Party sounds right now like there really are no negotiations for them. It‘s their way or the highway, correct?
PHILLIPS: Well, you know, we won the last election. Look what happened in the House of Representatives—John Boehner but for the Tea Party would not be a speaker of the House. But, you know, there‘s nothing else that nobody is really talking about here. I think it‘s pretty important. Most of these people who are the freshmen class in the House of Representatives ran on the promise they weren‘t going to raise the debt ceiling. They were going to cut the spending.
And when is the last time we had politicians that kept promises? It‘s almost unheard of.
SCHULTZ: Ezra, what do you think?
KLEIN: It isn‘t a good thing to keep a promise and crash the economy. They did promise to cut spending and they‘re getting quite an opportunity to do it. The deal on the table, the big deal, not the small ones, was $3 trillion in spending cuts for $1 trillion in tax increases.
And all those taxes, by the way, were tax expenditures with guys like Alan Greenspan and Milton Friedman called spending—spending in the tax code.
So, this was a sort of a generation opportunity and to be fair, if they get this deal, they still be, but it was quite an opportunity to cut spending drastically. But that hasn‘t been the overriding the part. The overriding part is not been shrink government or cutting spending but preventing any type of tax increase on anyone at any time.
SCHULTZ: Would you go so far as to say tonight it doesn‘t look good for the president to get a revenue increase from the top 1 percent or 2 percent?
KLEIN: No, not at all. No, not all. It doesn‘t good look.
SCHULTZ: It doesn‘t look. I don‘t think it does.
KLEIN: There seems to be no chance of it in this part of the deal.
SCHULTZ: And to make cuts, to hit the middle class, to hit the fixed income Americans, how does he politically work his way out of that? Right now, this is a victory for the Tea Party, the way this is coming down?
KLEIN: If he wants revenues, all he has to do is nothing. He would get significant revenues in December of 2012. But the problem for the White House or the problem for folks like you who want that is they don‘t want to have that fight. They would much prefer to get fewer revenues now, but get into a deal.
SCHULTZ: Great to have you with us tonight.
(CROSS TALK) .
SCHULTZ: You bet. Thanks so much.
SCHULTZ: Rupert Murdoch says the scandal engulfing News Corp is an isolated incident, but new details paint a picture of a company fueled by lies and intimidation.
And 2012 candidate Herman Cain doubles down on his anti-Muslim rhetoric, saying the Constitution doesn‘t apply to Islam. Plus, he‘s playing the Mormon card against the Mittster. Stay tuned. We‘re right back.
(COMMERCIAL BREAK)
SCHULTZ: The hacking scandal that could bring down Rupert Murdoch‘s media empire keeps getting bigger. Eleven arrests have been already made, including the former CEO of Murdoch‘s international newspaper group. Rebekah Brooks was arrested on suspicion of phone hacking and bribing police.
There were new allegations by actor Jude Law, who says his phone was hacked by “News of the World” while he was in New York. If true, that could mean News Corp could be prosecuted here in the United States.
In a bizarre twist, a former “News of the World” reporter, who was one of the first to report on this scandal as a whistle blower, was found dead today. The police say the death is being labeled not suspicious. But an investigation is ongoing.
Tomorrow, Murdoch and his son James will testify to British parliament along with Brooks. Bloomberg reports that Murdoch‘s testimony may decide his future as CEO. Murdoch released a full-page apology advertisement in every British newspaper yesterday.
But while Murdoch tries to portray the scandal as an isolated incident, new details show a corporate culture of thuggery and cover-ups. According to the “New York Times,” News Corp has paid at least 655 million dollars over the last five years to silence charges of spying and anti-competitive practices by its marketing division.
The division is led by Paul Carlucci, who Murdoch also named the publisher of the “New York Post.”
And coming up, we‘ll show you another troubling example of how Carlucci helped define a culture of intimidation that Murdoch claims doesn‘t exist. We‘ll be right back.
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SCHULTZ: Before the break, I told you about the News Corp‘s Paul Carlucci. His department is responsible for 655 million dollars in lawsuit settlements. Maybe this is why he routinely shows this clip from the movie “The Untouchables” to his staff and says bed-wetting liberal employees will be booted from the company.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I‘m going out there for myself. But I get nowhere unless the team wins.
CROWD: Team.
(END VIDEO CLIP)
SCHULTZ: Well, we can‘t show you the rest of the violent clip on television. But the head of News Corp‘s marketing department thought it was appropriate to show that to his sales staff.
Joining me tonight is the president of Brave New Film Foundation Robert Greenwald, who is also the director of the documentary film “Outfoxed, Rupert Murdoch‘s War on Journalism.”
Mr. Greenwald, good to have you with us tonight. Mr. Murdoch claims this phone hacking scandal is an isolated incident. But do you think it represents the corporate culture at this company, when they have activities like that in sales meetings, trying to motivate people? What do you think?
ROBERT GREENWALD, BRAVE NEW FILMS: There‘s no question it‘s the corporate culture. It‘s the result of an atmosphere of bullying. It‘s a result also, Ed, of lying, distorting, cheating. And as the former prime minister in Britain said, it‘s the rats coming up out the sewer.
And that‘s about as strong a statement as you‘re going to get from a politician. But I think it‘s also important for us to understand what a pervasive effect one man controlling so much media has had on our lives here in the United States. Day after day, whether it was their cheerleading for the Iraq War or being the communications arm of the Tea Party, this has had and continues to have a profound effect on our lives each and every day.
SCHULTZ: Well, the editorial today in the “Wall Street Journal” obviously defending the action of Murdoch. Also their property “Fox and Friends” defended the parent company. Let‘s listen to how they played it out this morning.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The company has come forward and they‘ve said, look, this happened a long time ago at a tabloid in London. Somebody did something really bad. And the company reacted. They close that newspaper. All those people got fired, even though 99 percent of them absolutely had nothing to do with it.
UNIDENTIFIED MALE: If I‘m not mistaken, Murdoch, who owns it, has apologized. But for some reason the public, media keeps going over this again and again.
UNIDENTIFIED MALE: The piling on.
(END VIDEO CLIP)
SCHULTZ: Is it piling on, Mr. Greenwald?
GREENWALD: That‘s actually quite disgusting, Ed. And look what they‘re doing to the “Wall Street Journal.” look how Murdoch has taken what was once a good newspaper, and to his shame has turned it into another propaganda rag for him and a paper that, day by day, is losing its integrity.
No, this is not piling on. There‘s another word for it. This is called democracy. It‘s a word maybe they don‘t understand over there because they‘re a top down company, run by Murdoch, that gives reporters daily memos about how to treat the news and what to say and what not to say.
It‘s going to continue. The question is it going to get to Murdoch‘s son? Is he going to throw him under the bus? Is it going to get to Murdoch himself? Is the board of directors finally going to stand up the way they should? This is a publicly traded company, and Murdoch acts like it‘s his own personal piggy bank.
SCHULTZ: Robert, do you think tomorrow‘s testimony is huge for Murdoch to stay in that position of CEO?
GREENWALD: Well, you know, it‘s as interesting a day of television, at least in anticipation, as we will have seen in a while. He has got the board of directors stacked. They‘re people he put on it. He has a huge number of shares in the company.
So I don‘t see—at least at the moment, I don‘t see a legitimate way that he will be taken out of that position. But who would have thought we‘d be here today, Ed, just a few days ago. The momentum is extraordinary.
SCHULTZ: No doubt. Robert Greenwald, good to have you with us tonight. Thank you.
Presidential candidate Herman Cain said he wouldn‘t put Muslims in his cabinet. Then he said he would but only if they took a loyalty oath. Now he‘s saying Islam isn‘t protected by the First Amendment. This guy belongs in the Zone, next.
(COMMERCIAL BREAK)
SCHULTZ: In Psycho Talk tonight, Herman Cain delivers more anti-Muslim rhetoric. This time, he‘s opposing an Islamic center being built in Tennessee. Cain thinks the First Amendment doesn‘t apply to Muslims.
(BEGIN VIDEO CLIP)
HERMAN CAIN ®, PRESIDENTIAL CANDIDATE: They‘re using the church part of our First Amendment to infuse their mosque in that community. And the people in the community do not like it. They‘re objecting to the fact that Islam is both a religion and a set of laws, Sharia law.
The people in the community know best. I happen to side with the people in the community.
CHRIS WALLACE, FOX NEWS ANCHOR: So you‘re saying any community, if they want to ban a mosque—
CAIN: Yes, they have the right to do that.
(END VIDEO CLIP)
SCHULTZ: Herman Cain, he seems to be confused about our constitutional rights. The First Amendment gives us the right to freely practice any religion we choose. It does not give bigots the right to ban religions they disagree with.
Cain is flat out wrong about those people in the community he claims do not like the mosque. Only 25 percent of the people in Tennessee object to it. Almost 75 percent think Muslims deserve the same rights as any other American.
But Islam isn‘t the only religion Herman Cain is exploiting for political gain. Today, Cain today the “Washington Times” Mitt Romney will lose the election because of his Mormon beliefs.
(BEGIN VIDEO CLIP)
CAIN: The reason that he will have a difficult time winning the south is because when he ran the first time, he did not do a good job of communicating his religion. Unfortunately, it doesn‘t bother me, but I do know that it‘s an issue with a lot of southerners.
(END VIDEO CLIP)
SCHULTZ: Herman Cain has shown he will exploit any political opportunity. And for him to say communities have a right to ban mosques is unconstitutional Psycho Talk.
John Boehner and Eric Cantor want to squeeze America with a cut, cap and balance bill tomorrow. Our panel will tell you why the speaker might have to grab his hanky. That‘s next.
(COMMERCIAL BREAK)
SCHULTZ: And finally tonight on THE ED SHOW, a discussion. Liberals are asking themselves if President Obama will cave in on raising taxes and not get any revenue in this deal, and yet go after the big three and allow it to happen. Laura Flanders, host of Grit TV and Free Speech TV, Bill Press with us tonight, host of “The Bill Press” nationally syndicated radio show, and Brad Woodhouse, communications director for the Democratic National Committee.
Mr. Woodhouse, I got to start with you first. Isn‘t the base going to take the president to the woodshed if he cuts the big three and doesn‘t get revenue raised in this deal? What about that?
BRAD WOODHOUSE, DNC COMM. CHAIRMAN: Look, Ed, I wouldn‘t assume that‘s what the president is going to do. As you know, this president has been very strong in saying he wants a big deal. He‘s continued to say that. And he is not going to slash Social Security. He‘s not going to allow deep cuts to Medicare.
And he has put revenue on the table. And that‘s a position that I believe that he will maintain.
SCHULTZ: Bill Press, how‘s he going to do it?
BILL PRESS, RADIO TALK SHOW HOST: Look, I‘m nervous also about the fact that President Obama may take any deal that comes down the road. But I do agree with Brad. He‘s put himself on the line, Ed. He‘s not going to cut benefits on Social Security. He‘s not going to let them get rid of Medicare.
I think the problem is that the Republicans are going to go through this whole exercise tomorrow for this—what do they call it, cut, cap and balance, right, which Jay Carney today called “Duck, dodge and destroy.” It is going nowhere.
It will never pass the Senate. The president won‘t sign it. And so we‘re just going to be stuck in this gridlock again.
SCHULTZ: Brad and Bill, I disagree with you. I think there‘s going to be cuts. I think they‘re going to be brutal. And I don‘t think the Republicans are going to budge on taxes. Laura Flanders?
LAURA FLANDERS, RADIO TALK SHOW HOST: I‘m with you, Ed. If we see anything over the last four years, it‘s that the debate is only part of the attack. At the end of the debate, a lot of the points of the Republican attack have been won.
If the president gets himself locked into a no spending promise, if he gets himself locked into no stimulus, no jobs, no creative way to respond to the crisis that we continue to face, then that‘s not good for him.
(CROSS TALK)
SCHULTZ: How‘s he go back and warm up to the base after this. Bill Press, we‘ve seen this movie before. The public option, the Bush tax cuts, what about it?
PRESS: Ed, listen, here‘s where I agree with Laura: I think we‘re all chasing the wrong rabbit down a hole here. The number one issue facing Americans—we‘ve sucked into this—we‘ve been sucked into this. It‘s wrong. It‘s not reducing the debt. It‘s creating jobs.
FLANDERS: You want to reduce spending? Let‘s talk about military spending. If you want to talk about bringing down costs, let‘s bring in the private profiteers.
But we cannot see our president lock himself into an agreement to cut spending in an election year or any kind of economic crisis like the one right now.
PRESS: I would even go further and say we didn‘t become a great nation by thinking small. We didn‘t become a great nation by cutting spending. This is not the time to be cutting spending.
SCHULTZ: He has got the Tea Party to contend with over in the House with John Boehner. Boehner has a Tea Party problem. Brad Woodhouse, you heard Mr. Phillips say earlier tonight on this program, look, it‘s the debt ceiling. You can talk about 4.5 trillion in cuts. You can talk about raising revenues or holding the line on taxes. They will not vote to raise the debt ceiling. And they‘ve taken an oath and that‘s where they stand.
That is the fly in the ointment, is it not?
WOODHOUSE: It could be, Ed. If they do, Republicans will own it. Republicans will own the first default in American history. They‘ll own the economic calamity that comes from that. Let‘s remember here—
FLANDERS: Not if the president goes every night on TV and takes it to the nation that it is the Tea Party‘s fault. This is the time to nip this in the bud. This is the time for the president to get strong and say it‘s not Congress. It‘s certain people in Congress who want to destroy this economy.
WOODHOUSE: I think he‘s talking about that. He‘s talking about the -
-

PRESS: The other thing he has to say is that this is all politics.
We‘ve raised the debt ceiling 39 times since 1980, no strings attached.
SCHULTZ: Bill, they had the votes back then. They don‘t have the votes now. This is a totally different Republican crowd right now. These folks are playing for keeps. They want to take down President Obama. The bottom line is we could default on what we owe around the world. It could change our credit rating. Unemployment could go up. And that‘s exactly what the Republicans want.
(CROSS TALK)
FLANDERS: There are other plans we can go for here.
SCHULTZ: Bill, go ahead.
PRESS: I was going to say, we‘ve seen this movie before. You‘re right. They‘re willing to do that. And as far as I‘m concerned, if I were Obama, I would call their bluff and let them do it. I think they will destroy the Republican party if they let this country go.
SCHULTZ: Is that a good strategy, Brad?
WOODHOUSE: Look, Ed, Mitch McConnell—I wouldn‘t say that I agree with much of anything Mitch McConnell says, but he got it right when he said that if Republicans allow this country to default, they will own it for a generation. It will ruin the Republican brand.
And so that‘s what John Boehner is contending with in the House. And that‘s what the Republican Tea Partiers have to decide.
SCHULTZ: But they‘re going to be able to go home and say, you know, it‘s a little bit tough right now, but we held the line on spending and we didn‘t raise your taxes. And that is what they‘ve been all about and we‘ve gone after the big three.
(CROSS TALK)
WOODHOUSE: That‘s the problem. That‘s the problem. It won‘t just be tough. It will be—it won‘t be just tough. It will be detrimental to seniors. It‘s not just a problem—
(CROSS TALK)
SCHULTZ: Final word, Bill.
PRESS: The first day the Social Security checks don‘t arrive and the Veterans checks don‘t arrive, this thing is over, the Republican party goes down.
SCHULTZ: OK.
WOODHOUSE: That‘s right.
SCHULTZ: Laura Flanders, Bill Press, Brad Woodhouse, good to have you with us tonight. Thanks so much.
Tonight in our survey, I asked do you think President Obama should cave on tax increases? Three percent of you said yes; 97 percent of you said no. I hope he gets the deal he wants.
That‘s THE ED SHOW. I‘m Ed Schultz. “THE LAST WORD” with Lawrence O‘Donnell starts right now. We‘ll see you back here tomorrow night. Thanks for watching.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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